The graying of America will not only strain programs like Medicare and Social Security and shrink the pool of experienced, productive workers but also slow economic growth because younger people caring for senior family members will be working less as a result.
That is the finding of a new working paper from the National Bureau of Economic Research, written by Finn Kydland, economics professor at the University of California, Santa Barbara, and Nick Pretnar, a Ph.D. student in economics at Carnegie Mellon’s Tepper School of Business.
The economists project that the effects of caregiving, and the reduction in the percentage of the population in the workforce, will cut the nation’s economic output 17% by 2056 — and 39% by 2096 — assuming a constant population distribution.
On a more positive note, the research finds that economic output would increase 5.4%, if diseases like Alzheimer’s and dementia affecting the older population were cured.
The authors cite estimates by the Alzheimer’s Association that 17 billion hours of unpaid care were provided by relatives to seniors with the disease in 2010, and over 90% of people with Alzheimer’s or dementia received informal care in addition to the care provided by professional hospice services.
“As the population ages and Alzheimer’s and dementia prevalences increases, it is reasonable to expect that the quantity of informal care provided by working-age adults to elderly adults will increase,” according to the paper.
The authors recommend that policymakers consider how the population age distribution affects the country’s economic performance when they propose policy changes to counteract stagnating growth. Moreover, they note that curing Alzheimer’s disease and other forms of dementia would provide only a modest boost.
“Aging appears to have broad impacts on long-run GDP growth, regardless of old-age disease risk,” the authors warn.
According to Census Bureau projections, roughly 17% of the U.S. population will be 65 or older by 2020, rising to 20.6% in 2030 and 21.4% in 2035.
At the same time, the percentage of adults between ages 25 and 44 will fall slightly from 26.6% of the population in 2030 to 26.1% in 2035 after increasing from 24.3% in 2020.
By 2035, the bureau expects the number of Americans 65 and older will top the number of Americans under the age of 18 for the first time in history, reaching 78 million versus 76.7 million.
As a result of the aging of America, the Census Bureau also forecasts that the number of working-age adults will fall from 3.5 for every retiree in 2020 to 2.5 by 2060.
A copy of the paper is available online, behind a paywall, here.
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